NOTE 7. RELATED PARTY |
3 Months Ended |
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Mar. 31, 2017 | |
| Related Party Transactions [Abstract] | |
| Related Party Transactions Disclosure [Text Block] |
NOTE 7. RELATED PARTY
Transactions with related parties and affiliates
In association with Mr. Deputy’s employment agreement dated July 1, 2016, the Company issued one warrant to purchase one share of the Company’s restricted stock at the exercise price at quarter end for each dollar of Mr. Deputy’s deferred gross salary for the quarter ended March 31, 2017. Mr. Deputy’s total accrued salary from first deferral to March 31, 2017 was $87,520. The Company granted warrants to purchase 35,000 shares of common shares for quarter ended March 31, 2017. The warrants have a term of 36 months from their issuance date. The fair value of the quarter’s warrants was $4,851, based on a $0.14 price per share valuation, volatility of 296%, a discount rate of 1.09% and a 3 year term. The warrants were valued using the Black Sholes valuation model. The warrants were recognized as stock compensation expense.
During the three months ended March 31, 2017, shareholders advanced an additional $126,500. This increased the shareholder advance liability from $192,000 at December 31, 2016 to $318,500 at March 31, 2017.
On September 23, 2015, the Company’s Board of Directors agreed to issue Mr. Zel C. Khan, the CEO and President of the Company, 1,000,000 shares of the Company’s restricted common stock in consideration for entering into an employment agreement with the Company. The value of the award on the issuance date was $68,000 and the award vests over a twenty four (24) month term. Consequently, $8,500 of the award is being expensed each quarter. During the first quarter of 2017, $8,500 of the award was expensed. The remaining award amount is $17,000.
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